If We Want Better Teachers, We Need Better Incentives

Teachers receive salary and pension benefits later in their careers, which works to the advantage of many, including the unions that lead them, but this rewards structure could be keeping lots of talented individuals out of the classrooms.

On June 3, the United Federation of Teachers—New York City’s largest teachers union—will announce the results of a vote on whether to approve a new contract with the city. Among the key elements of the deal is back pay for a period from 2009 through 2011 in which teachers—unlike many other city employees—received no annual raises.

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But there's a quirk in the deal. The payments will only be made to teachers who are still teaching at the time payments are disbursed. So if two teachers did the same work in 2011, only those who are still teaching next fall will receive back pay for it. And to receive the full amount they must still be teaching when the final payment is made in 2019.

Financial incentives aimed at keeping teachers in the profession are nothing new. Instead of accruing benefits linearly, teachers often receive disproportionate bumps in salary at later stages in their career. Under the UFT’s old contract, teachers could see a salary increase of about $4,500 throough their first five years, but an increase of an additional $17,000 from their sixth through 11th years. Compare this to many federal government jobs, where higher “steps” involve linear pay increases, or the financial industry, where entry-level employees may be able to earn large bonuses.

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Retirement benefits for teachers also tend to accrue faster at later stages in their careers.

Really wanting to be a teacher when you’re 21 is neither sufficient nor necessary for having a lengthy teaching career, and so we should cast as wide a net as possible.

According to a new Bellwether Education report by Chad Aldeman, a former U.S. Department of Education official, and Andrew Rotherham, a former policy aide to Bill Clinton’s White House, half of all teachers will not even teach long enough to qualify for a minimal pension benefit. At the New York Times’ the Upshot, Josh Barro highlights a few exceptionally egregious pension systems, including one that features no employer contributions for a teacher’s first 14 years on the job. In contract, many other employers begin matching an employee’s retirement contributions within their first year or two on the job.

Perks that arrive late in the careers of teachers are not restricted to salary and benefits. There are also policies like “last in, first out,” which blindly favor veteran teachers when layoffs are necessary.

For teachers unions it makes sense to pursue policies that disproportionately reward seniority. Unions grow stronger with less turnover, and they prefer not to see the fruits of their labor go to somebody who’s about to quit teaching and go to law school. But favoring teachers with longer tenure isn’t necessarily self-serving—there is wide agreement among researchers that veteran teachers tend to outperform new teachers, although there is evidence of diminishing returns to experience by a teacher’s fifth year, and the effect of experience can vary based on a teacher’s school or students.

But even if society benefits when teachers commit to their jobs for the long haul, the things we do to keep them there are not without costs. Policies designed to keep people in the teaching profession are often at odds with policies that would attract people to the profession in the first place. By disproportionately rewarding veteran teachers public officials make it less appealing to try teaching

Imagine you’re a college senior deciding between two career paths that are equivalent in every way except for the following:

Career A: Pays a $1,000 bonus at the end of every year.

Career B. Pays a $12,000 bonus every eight years.

Career B arguably has a more generous compensation package, but it won’t appeal to somebody who thinks there’s a possibility they won’t like the job. If they don’t stay at least eight years, Career A is more lucrative.

American employment has changed a lot over the last generation. Just half a century ago many people spent their entire lives with a single company. College students were less likely to be encouraged to “do what you love.” In such a world it made more sense to backload compensation because people had higher expectations that they would still be at their first job after eight years.

Nowadays it isn’t unusual for people to change careers multiple times before they turn 30. With cultural norms moving toward shorter stints, professions that disproportionately reward seniority will have harder time attracting new recruits. Sure, if somebody really wants to teach, policies favoring veteran teachers won’t make a difference. But every year there is a group of college students who are torn about their future, and these policies may nudge them to try a different career. If those students would have gone on to have illustrious 45-year teaching careers, that’s a loss for society.

None of this is to say that it’s not vital to attract teachers who view teaching as a lifelong career. But really wanting to be a teacher when you’re 21 is neither sufficient nor necessary for having a lengthy teaching career, and so we should cast as wide a net as possible. When compensation systems disproportionately favor long careers the effect is to take the entire pool of people who might become great teachers and drive away those who are less confident they’ll love the job.

The meta-problem is that the conflict between current teachers and prospective teachers is ignored in policy debates. Unions are happy to favor their veterans, and governments tend to be more concerned with the total dollar amount of compensation systems, not how the money is being spent. (Hence the New York City deal, which saves money by cutting out former teachers.) Meanwhile, confused college seniors aren’t going to band together to advocate for better early career benefits at a job they might not even take.

Still, the fact remains that teacher compensation policies exist on a spectrum that runs from “policies designed to retain” to “policies designed to attract.” There is a socially optimal spot on that spectrum, and we should be more concerned with finding it. I think we should move closer to the “attract” side, but a lack of dialogue and good data means it’s an issue where reasonable people ought to disagree. Once policymakers acknowledge that current teachers and prospective teachers are different groups with different preferences, we can begin to make progress on finding the right way to cater to them both.

Reducing teacher turnover is an important goal—nobody wants the entire country to have the low retention rates of Teach For America. But we may ultimately end up with a better teaching profession if we make it more accommodating to those who are on the fence about it.